Which of the Following Fiscal Policies Will Increase Aggregate Supply

question 123

Multiple Choice

Which of the following fiscal policies will increase aggregate supply?

• A) increasing tax rates on consumers
• B) increasing tax rates on businesses
• C) reducing the depreciation period for business equipment from five years to three years
• D) instituting more regulations on businesses

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Definitions:

Recession Phase

Part of the business cycle characterized by a decline in economic activity, marked by falling GDP and rising unemployment.

Full Employment

A situation in an economy where all available labor resources are being used in the most economically efficient way, typically characterized by low unemployment.

Cyclical Unemployment

Unemployment attributed to the cyclical trends in the economy, typically increasing during recessions and decreasing during expansions.

Recovery Phase

A stage in the economic cycle where economic activity picks up and GDP starts to rise again after a period of decline or recession.